Bed Bath and Beyond Inc (BBBY) 2014 Third Quarter Earnings Conference Call Transcript

True to our history and as our successful track record shows are never satisfied, overall, we were able to meet the needs our customers and we are confident in our ability to prosper in this evolving retail environment. We continue to maintain our philosophy of providing great service and great selection at the right value. And now we can do this in more ways than ever.

Our ability to interact with our customers wherever, whenever and however to express their lifestyles and habits and move through their various life stages creates a powerful customer value proposition and a loyal customer base. By combining our services and merchandise offerings together with the ability to utilize the significant data available to us about our customer’s preferences, we are excited to have the opportunity to become more dynamic and more relevant to our customers.

As Janet mentioned and as Sue will discuss in more detail, Bed Bath and Beyond reported net earnings per diluted share of $1.23 which includes approximately $0.04 per diluted share of net benefits for certain non-recurring items, including credit card fee litigation. Our net sales of $2.9 billion and a comp sales increase of approximately 1.7% and, we continue to model net earnings per diluted share in the range of $1.78 to $1.83 for the Fourth Quarter.

As a reminder, with respect to our comparable sales metric, it includes sales transactions consummated through all of our retail channels, including in-store, online and through a mobile device. Today, more than ever customers are taking advantage of our omni-channel environment by using more than one platform to make their purchases.

For example, a customer may go to our store and be assisted by an associate to create a wedding or baby registry. This registry gift could then be purchased from one of our websites Or, a shopper may research a particular item on our website and read various customer reviews before visiting a store to make a purchase. The same customer may choose to execute the sale via mobile device and choose either in-store pickup or home delivery which could then be fulfilled from a distribution facility, from a store or directly from a vendor. As we’ve consistently said, we believe an integrated shopping experience must exist among all channels to provide a seamless and efficient customer experience.

Today our customers have many convenient options to interact with us to find what they need, when and how they want it. Our example of seamless shopping experience is that we accept returns in-store without regard to the channel to which the purchase was consummated. It is worth noting that on a case that the item being purchased online are returned to the store, the sales return actually results in a reduction in a store sales even though the store was consummated in a different channel.

Our highly integrated retail operation makes it difficult for us to reasonably track the channel in which the sale was initiated. However, as we did last Quarter, we can provide directional information on how the sale was completed. With all these in mind, during the Third Quarter of Fiscal 2014, comparable sales consummated through customer spacing online websites and mobile applications grew in excess of 40%. But comparable sales consummated in our stores were relatively flat.

As a reminder, we replatformed both the Buy Buy Baby and Bed, Bath and Beyond websites during the Second Quarter of Fiscal 2013.

Our commitment to take care of our customer is directly related to many of our capital investments including our investments in technology. We believe new features and improved technology have created a better customer experience and are contributing to our online sales growth. We recognize that the capital investments we are making and incremental expenses related to them are increasing their technology cost and appreciation as well as other expenses as a percentage of net sales in the short term. However we are confident we are making the appropriate investments to position our company for long-term profitable growth and to further enhance shareholder value in an evolving retail environment.